Moneysupermarket slips after results show credit crunch pressures

Price comparison website Moneysupermarket.com has dropped 1.5% after it said it would pay a special dividend of 4.93p per share but its first-half results showed a sharp drop in profits.

Pre-tax profits dropped to £1.9m from £14.4m a year earlier as revenues "were impacted by the credit crunch which reduced both the supply of credit and consumer discretionary expenditure relative to the same period last year."

Still, the company, which has been hurt during the credit crunch by factors such as a fall in mortgage lending and weaker consumer demand for travel bookings, said trading levels had stabilised over the past six months.

Chief executive Peter Plumb commented:

"Although we are still early in the third quarter and visibility is limited, the group has made a good start with revenues more than ten percent ahead of the first half run rate. Insurance in particular has started well and is trading ahead of the same period last year."

Analysts at Credit Suisse noted Moneysupermarket's outlook statement was positive for the first time in nearly 18 months.

They reiterated their "outperform" recommendation on the shares and upgraded their 2009 earnings estimate by 13%, adding:

"We are buyers based on the fundamentals of valuation/growth and believe Moneysupermarket is an attractive and structurally intact way of playing a cyclical recovery."

The shares are down 1.1p, or 1.5%, to 71.25p, underperforming the wider FTSE 250 index, which is down 0.6% in late trading.

With half an hour of trading to go, the FTSE 100 is on course to end the day in the red, currently 29 points, or 0.6%, lower at 4,653.3. Standard Chartered is the biggest faller, down almost 8% following its results and share placing.